Math 102 Mathematician: 11.2 Simple Interest Day 1 Simple Interest Formula Principal: Interest: Time: Rate: Time 1 year _________ months __________ days Simple Interest Example 1 – Completely Straightforward Determine the simple interest on $4,800 at 6% for 3 years. NOTE: What is the total amount that you owe the bank? Simple Interest Example 2 – Rate and Time are not measured the same way Determine the simple interest on $575 at 0.08% per day for 2 months. NOTE: What is the total amount that you owe the bank? Simple Interest Example 3 – Missing something other than the simple interest Determine how long it took to pay back a loan of $862.50 at 3.5% annual interest if $150.94 was the calculated simple interest. NOTE: What is the total amount that you owe the bank? In simple interest loans, the and the are paid on the due date of the loan. In discount notes, the interest is paid at the time the borrower receives the loan. The interest charged in advance is called the . Discount Note Example 1 – Word problem Dominique took out a $500 loan for a period of 3 months. The bank discounted the loan at 10%. A) Determine the interest she must pay back to the bank on the date she receives the loan. B) Determine the net amount of money she receives from the bank. C) Determine the actual rate of interest for the loan.